avon canada failure
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Agenda
• AVON BACKGROUND
• PROJECT OVERVIEW
• TIMELINE
• INITIAL PROBLEMS/RED FLAGS
• MATURITY LEVELS
• PREVENTION
• RECOVERY
• LESSONS LEARNED
Who is Avon?
Beauty Product Company
Founded in 1886
Multi-level Marketing Structure
Offices in over 100 Countries
Millions of Representatives
CEO at the time: Andrea Jung
Pic 1: http://wildmorrealty.com/wp-content/uploads/avon-logo.jpgPic2: http://www.forbes.com/profile/andrea-jung/
Project Background Perspective
2006, Avon announces its plan to invest in its Representatives
$120 million investment in revisions
Expected $400 million cost savings
Initiatives included:
Training representatives for leadership
Restructuring global supply chain operations
Realigning certain local business support functions
Streamlining transaction-related services
Why Create the ‘Promise’ Project?
Problem:
Original Ordering Done from Catalogs
Slow order placement or acknowledgement
No indication of availability or backlog
Result:
Unfulfilled orders
Backlogs
Excessively Long Lead Times
Pic: http://www.hints4beauty.com/avoncatalog/2013/campaign5/p42.jpg
The ‘Promise’ Project
Goal:
Create a new interface and app for use on mobile devices
Integrate real time inventory and shipping info
The Result:
Install three separate pieces of software to update the process
SAP
CRM (Customer Relations Module)
ERP (Enterprise Resource Planning)
IBM WebSphere e-commerce
Timeline – finish by late 2012 (less than 2 years)
Budget – Between $100-120 million – ROI of 5 years must not be exceeded
Pic1: http://egov.eletsonline.com/wp-content/uploads/2012/08/SAP-2.jpg
Timeline
2006: Announcement to stakeholders
Today: Still amassing losses
2010: Planning Began
May 2011: Plan is signed off by Executive Leadership
April 22, 2012: Andrea Jung is Replaced with Sherilyn McCoy
Late 2012: ‘Big Bang’ Release in Canada
2013: Shut Down in Q3
2014: Estimated $48.4 Million Loss
$55.4 Million Loss
•A team is established in White Plains, NY and comprised of select associates from Brazil, Mexico, Russia, US, and UK
Initial Problems
Combined two independent vendor products with a third party to integrate
No clear Lead Project Manager Identified
Hiring individual PM’s for each module of software during building process
Leadership of the company lacked cultural competence
Executive Sales Leader had little knowledge of new technology being launched
Large Scale Project
Poor communication with sales reps
Mobile App concept was relatively new
Rollout and Problem Discovery
In 2012/2013, the ‘Promise’ project was released in Canada
From the start, Representatives faced issues
Couldn’t properly use the new system
Logging in
Saving orders
Checking Inventory
Saving Inventory
Representatives
Not tech savvy
Part time – Low Pay
No incentives to stay
Results
Estimated that 16,000 employees left the company
Total Number of Avon Representatives lost: 6.21mill (2013) – 5.96 mill(2014) (4% decrease)
7% decline in revenue by Q3 of 2013
Discontinued global rollout indefinitely
1. Project IntegrationLevel: 1 2 3 4 5
Project Plan Development
Ad hoc Documented process
Risk, cost, schedule, quality, HR
Integrated w/ organization’s strategic plan
Improvement process in place
Project Plan Execution
Informal, verbal direction
Summary level metrics
Detail level metrics, templates
Variance & performance analysis
Lessons learned
Change Control
Ad hoc, without PM awareness
Scope only changes identified
Scope, cost, schedule identified
Integrated w/ control, risk management
Changes are in efficiency metrics
Project Information System
None Simple PM information system
Standardized system for all projects
Automated system
Continuous improvement of data & sys.
Project Office Informal, no standards or training
Established, training available
PM methods, PM training mandatory
Best practice, PM training for all team
Cost-tracking support, EV, PMP training
“Project Management Maturity Model,” Crawford, 2002
2. Project Quality Management
“Project Management Maturity Model,” Crawford, 2002
Level: 1 2 3 4 5
Quality Planning
High-level plans, ad hoc
Metrics of reviews, tests
Quality milestones, checklists
Product environment included
Process critiqued during project
Quality Assurance
No established practices
Walkthroughs peer reviews
QA checklists standard
Walkthroughs with other project teams
Feedback on processes
Quality Control
No established practices
Guidelines for testing (unit, integration)
Standards for testing, client involvement
Performance standards in place
Decisions on usability and fit of product
Management Oversight
Management involvement limited
Mgt assigns PM, receives reports
Institution has standard PM practices
Integrated w/ corporate processes
Active role in management
3. Human Resources Management
“Project Management Maturity Model,” Crawford, 2002
Level: 1 2 3 4 5
Organization Planning
Ad hoc assignment, informal report
Skill sets, timeframe identified
Resource constraints included
Resource mgt and prioritization
Periodic evaluation
Staff Acquisition
Ad hoc Skill matching, resource cost
Resource pool management
Skills inventory data base
Enterprise resource forecasting
Team Development
Occasional team meetings
Kickoff, reviews, meetings
Collocation, peer evaluation
Team member training
Member training forecasting
Professional Development
No standards or processes for PM
PM exper & knowledge required
Solid PM exper & knowledge
Corporate PM development
Lessons learned training
4. Communications Management
“Project Management Maturity Model,” Crawford, 2002
Level: 1 2 3 4 5
Communi-cations planning
No standards Informal stakeholder analysis
Comm plan expected for all projects
Update and refine comm mgt plan
Lessons learned analyzed
Information Distribution
Ad hoc distribution of information
Stakeholder distribution of status
Formal info status system for stkholder
Automated database queries
Improve process measures
Performance Reporting
Informal reporting of status
Summarize status, progress
Graphical performance reporting
Formal variance & trend analysis
Efficiency & effectiveness metrics
Issues Tracking
Issues handled as ad hoc basis
Issues management not enforced
Regular issues meetings
Impacts of issues on other areas
Tracking process evaluated
5. Project Risk Management
“Project Management Maturity Model,” Crawford, 2002
Level: 1 2 3 4 5
Risk Identification
Risks not identified
Risk identification process
Standards for risk/symptom identification
Integrated w/ cost & time mgt, PMO
Identify org. priority, lessons learn
Risk Quantification
Speculate on impact if risks occur
Structured approach to rating risks
Multiple criteria prioritization
Integrated w/ cost & time mgt, finance
Improve quantification
Risk Response Development
Risks considered as they arise
Informal strategy for handling risks
Contingency plans
Integrated w/ cost & time mgt, PMO
Tracking project reserves
Risk Control Day-to-day problem solving
Individualized approach to managing risk
Risks routinely tracked
Integrated with control systems
Risk assess included in proj execution
Risk Docu-mentation
No historical database
Some historical data
Historical data on common risks
Interdepen-dent risks betw projects
Improve collection activity
Recovery
Form Task Force to Analyze User Interface
Cross-functional Team
New Training Program
Top-down approach
Training Simulation
Recovery Team
Identify Risk and Mitigation techniques
Assessing Representatives Capabilities
Propose Ideas for future updates using collected data
Prevention
Improved Initial Planning Phase
Phased Approach
Include sales execs and representatives
Improved communication
Investors
Representatives
Hire Experienced Project Manager
User testing
Provide training opportunities for representatives
Lessons Learned
Learn from previous failures
Importance of understanding company culture
Planning should include members of each level
Testing should start small
Softer Rollout when possible
Open Communication
New Software = Employee Training
Picture Sources:Slide 2:http://wildmorrealty.com/wp-content/uploads/avon-logo.jpghttp://www.forbes.com/profile/andrea-jung/
Slide 4:http://www.hints4beauty.com/avoncatalog/2013/campaign5/p42.jpg
References
http://www.trefis.com/stock/avp/articles/218972/maryimplications-of-discontinuing-smt-program-on-avons-q4/2014-01-06
https://www.linkedin.com/jobs2/view/2640116
https://www.linkedin.com/jobs2/view/5290641
http://www.upperedge.com/2013/12/avon-to-sap-we-cant-put-enough-lipstick-on-this-pig-a-failure-in-program-risk-management/
http://www.zacks.com/stock/news/116796/layoffs-amp-smt-halt-at-avon-shares-fall
http://www.computerweekly.com/news/2240211011/Avon-drops-SAP-big-bang-transformation
http://www.informationweek.com/software/information-management/inside-avons-failed-order-management-project/d/d-id/1113100
http://www.forbes.com/sites/benkepes/2013/12/17/avons-failed-sap-implementation-a-perfect-example-of-enterprise-it-revolution/
http://blogs.wsj.com/cio/2013/12/11/avons-failed-sap-implementation-reflects-rise-of-usability/
http://www.dailymail.co.uk/femail/article-2335348/As-Joan-Peggy-battle-Avon-account-Mad-Men-beauty-giant-transformed-housewife-staple-favorite-working-woman.html
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